Sector Wrap: Industrial, Internet Thursday, March 25, 4:25 PM ET
After struggling with Congressional leaders for months, President Obama finally had his health care reform bill brought before the House for a vote. And on Sunday night, the bill passed by a narrow margin of 219 - 212 without the support of any Republican Congressmen. While many news stations were expecting the markets to drop in response to the vote, investors surprised us all by sending the markets higher this week. The Dow has climbed 1.6%, the S&P 500 has shown gains of 1.3% and the tech-heavy Nasdaq has performed the best, up almost two percent. The only weakness in the markets came on Wednesday when Fitch lowered the debt rating on Portugal, causing the dollar to rally and commodities to slump.
One of the first corporate responses to the health care bill came from Deere (DE) and Caterpillar (CAT) this morning. Both companies believe the newly-enacted laws will take away from their bottom line as each company will be able to take fewer deductions. Deere sees about $150 million in new expenses stemming from the health care bill this year, while Caterpillar estimates it will incur approximately $100 million in expenses.
Despite the possibility of higher expenses going forward, the iShares Industrial ETF (IYJ) was showing strength this week, climbing about 1.3% including today's modest gains.
And making global headlines this week was internet-search giant, Google (GOOG). For the past few weeks, Google has been torn over how to handle the situation in China. The company's founders had vowed to "Do no evil" while running their company, but censorship policies in China have forced the company to bend its own rules for the last few years. As means of turning a profit in China and keeping its vow, Google began redirecting visitors to its Chinese language service in Hong Kong. Analysts at Goldman expect China to retaliate against Google which should bode well for shares of Baidu (BIDU). Based on a report out Tuesday, Goldman believes Baidu could capture close to 75% of the Chinese market if Google is barred from the country.
Shares of the PowerShares Internet Portfolio (PNQI) were trading higher despite the negative news surrounding Google, up more than 1.4% on the week including today's gains.
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